Menthol Variety of Beyond Tobaccotm to Enter the Global Market as an Alternative to Traditional Menthol Cigarettes

Menthol cigarettes represent US $80 billion out of the US $814 billion global tobacco market, and a 36% share of the U.S. tobacco market alone. With menthol cigarette bans passed in jurisdictions to include Brazil, Canada, and the European Union, the Company has identified unmet demand that could continue to persist as more jurisdictions follow suit. Taat Beyond Tobaccotm cigarettes are to be offered in a menthol variety, which can appeal to menthol cigarette smokers. With a near-term planned product launch on track for Q4 2020, TAAT LTD believes Taat Beyond Tobaccotm cigarettes are well-positioned to capitalize on current and emerging trends relating to menthol cigarettes.

LAS VEGAS and VANCOUVER, British Columbia, July 03, 2020 (GLOBE NEWSWIRE) -- TAAT LIFESTYLE & WELLNESS LTD. (CSE: TAAT) (FRANKFURT: 2TP2) (the "Company" or "TAAT LTD") has identified a significant opportunity to compete in the menthol cigarettes category of the global tobacco market with its menthol variety of Taat Beyond Tobaccotm cigarettes. At a global level, the menthol cigarette category was valued by Grand View Research at USD $80 billion in 2018, with a predicted compounded annual growth rate of 3.1% between 2019 and 2025¹. Despite this projected growth, the Company believes that there is significant unmet demand which can potentially continue to be unmet as several government bodies worldwide have banned or have sought to ban menthol cigarettes, which began with a nationwide ban being passed in Brazil in 2012², with Canada following closely thereafter finalizing a federal ban on menthol cigarettes in October 2017³. Characterized by a unique cooling sensation from menthol (a substance derived from plants such as peppermint and spearmint), menthol cigarettes are believed by many smokers to be less harmful than traditional tobacco cigarettes, although according to the U.S. National Cancer Institute there is no evidence to substantiate this notion⁴.

The Company has developed Taat Beyond Tobaccotm cigarettes as a better-for-you alternative to traditional cigarettes in an "Original" tobacco flavour, as well as a "Menthol" version, neither of which contain nicotine or tobacco. The user experience of Taat Beyond Tobaccotm cigarettes is designed to replicate that of a traditional cigarette between the "stick" format, cigarette-style packaging, a proprietary flavouring blend, and an enhanced volume of smoke exhaled. Taat Beyond Tobaccotm cigarettes each contain a minimum of 50mg of cannabidiol ("CBD", a non-psychoactive derivative of hemp), which has been shown to mitigate tobacco withdrawals and reduce dependency. Initial retail market testing of Taat Beyond Tobaccotm cigarettes, as detailed in the Company's June 29, 2020 press release, yielded overwhelmingly positive responses from users, whose anecdotes formed a general consensus that there were no significant experiential differences between Taat Beyond Tobaccotm cigarettes and legacy tobacco products.

Menthol, which is also commonly used in non-tobacco products such as lozenges, ointments, and candy, was first added to cigarettes in the 1920s. The tobacco industry presented menthol cigarettes as a supposedly healthier alternative to regular cigarettes, which was part of a strategy to target beginner smokers who had health concerns regarding smoking⁴. Kools, the first major brand of menthol cigarettes, was founded in 1933 and gained a 2.2% market share by 1935 with the purported benefit of "throat comfort". Beginning in the mid-1950s, tobacco producers also began offering menthol cigarettes under standalone brands, including R.J. Reynolds (Salem), Lorillard (Newport, Spring), and Philip Morris (Alpine)⁵.

Following several decades of popularity for menthol cigarettes, in 2012 the World Health Organization published guidelines recommending regulation of ingredients that seek to make tobacco smoking more attractive, to include the use of flavours such as menthol⁶. To date, nationwide bans have been passed in Brazil² and Canada³, as well as across the European Union⁷. In February 2020, the United States House of Representatives approved a bill on a 213-195 vote which would include banning cigarette flavouring such as menthol⁸.

The Company believes that several current factors create an environment in which the menthol variety of Taat Beyond Tobaccotm cigarettes can potentially thrive. Foremost, there is a sustained demand for menthol cigarettes in jurisdictions in which they remain legal. As of 2018, menthol cigarettes represented 36% of all cigarettes sold in the United States, the highest ever proportion since reporting of such data by major tobacco companies was required⁹. A 2010 estimate by Philip Morris also showed that menthol cigarettes had a 49.4% market share in the Philippines¹⁰. Additionally, as of this writing there are no known competitor products that offer a cigarette-like smoking experience that specifically imitates menthol cigarettes. Between potentially being market-ready in just a matter of months and the combination of demand for and regulatory action against menthol cigarettes, TAAT LTD is confident in the early-stage and long-term prospects for Taat Beyond Tobaccotm cigarettes.

A chart accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/7200bba6-8493-4269-a54c-51140ed7b8e5

Chart adapted from The influence of the availability of menthol cigarettes on youth smoking prevalence (Oxford Economics, December 2012)¹⁰

TAAT LTD Founder Joe Deighan commented, "In recent years, many of the most successful innovation strategies have sought to identify unmet niche demand, as opposed to simply aligning with existing demand that is already being met. Like many other players in the tobacco space, we are abundantly aware of the mass-market demand for better-for-you alternatives to traditional cigarettes. The difference between traditional cigarettes and menthol cigarettes is that there is no existing threat to the legality of the former, whereas the latter has been banned in multiple jurisdictions, with others potentially on the horizon too. As a result, millions of menthol cigarette users are or may soon be without a choice but to stop smoking menthols. Because Taat Beyond Tobaccotm cigarettes are designed to mimic the experience of smoking a traditional cigarette, we believe that promoting the product in its menthol variety can appeal to menthol converts who may be unsatisfied by other alternatives. We plan to announce further details regarding our targeted strategy for the menthol variety of Taat Beyond Tobaccotm cigarettes as we approach our scheduled launch in Q4 2020."

References

1 - https://www.grandviewresearch.com/industry-analysis/menthol-cigarette-market
2 - https://apps.who.int/iris/bitstream/handle/10665/205928/9789241510332_eng.pdf?sequence=1 (Page 49)
3 - https://www.fda.gov/tobacco-products/research/evaluation-canadas-menthol-ban
4 - https://smokefree.gov/quit-smoking/ecigs-menthol-dip/menthol
5 - https://www.industrydocuments.ucsf.edu/tobacco/docs/#id=pzkj0136
6 - https://www.who.int/fctc/guidelines/Guideliness_Articles_9_10_rev_240613.pdf
7 - https://trade.ec.europa.eu/doclib/docs/2016/july/tradoc_154817.pdf
8 - https://abcnews.go.com/Health/wireStory/house-approves-bill-ban-sale-flavored-cigarettes-69286647
9 - https://www.cdc.gov/tobacco/basic_information/tobacco_industry/menthol-cigarettes/index.html#:~:text=As%20of%202018%2C%20sales%20of,required%20to%20report%20those%20data.
10 - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/229776/DE795779_Attachment_2_-_Oxford_Economics_The_influence_of_the_availability_of_ment.pdf

On behalf of the Board of Directors of the Company,

TAAT LIFESTYLE & WELLNESS LTD.

"Joel Dumaresq"

Joel Dumaresq, CEO and Director

For further information, please contact:

Joel Dumaresq
+1 604 336 3193
[email protected]

About Taat Lifestyle & Wellness Ltd.

Taat Herb Co., the flagship brand of Taat Lifestyle & Wellness, is an early-stage life sciences company based in Las Vegas, Nevada innovating nicotine-free and tobacco-free alternatives to traditional cigarettes. With a unique proprietary blend of all-natural ingredients and meticulous engineering of the user experience, Taat Beyond Tobaccotm cigarettes are designed to emulate every aspect of legacy tobacco products with no significant difference to the user. Taat Beyond Tobaccotm cigarettes provide benefits that include mitigation of tobacco withdrawals, and reduction of tobacco dependency. With an expert-led go-to-market strategy, the Company's objective is to position itself in the US $814 billion (2018) global tobacco industry to capitalize on the growing worldwide demand for better-for-you alternatives to traditional cigarettes.

For more information, please visit http://taatusa.com.

References

¹ British American Tobacco - The Global Market

Statement Regarding Effects of CBD on Smoking Cessation

The Beckley/Exeter research program (University of Exeter) carried out a pilot study that found after several weeks following cannabidiol ("CBD") treatment, CBD helped tobacco smokers to reduce the amount of cigarettes smoked by as much as 40%. A follow-on study is planned, which will include a brain imaging component to examine the brain activity patterns underlying the probable therapeutic effects of CBD.

Source: https://beckleyfoundation.org/cbd-for-smoking-cessation/
Link to Study: https://www.sciencedirect.com/science/article/abs/pii/S030646031300083X

Forward Looking Statements

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